Archive for November, 2010

It’s The Health Care Costs, Stupid

November 28th, 2010 7 comments

Get this straight:

If health-care costs were rising at the same rate as inflation — even with our aging population — we wouldn’t have a budget problem.

Congressional Budget Office:

The red line is what Medicare plus Medicaid would look like in that scenario.

So, for all you Democrats whining about how Obama should have tackled the short-term economy (or something else) first (forget the Republicans; they’re not interested in reason), STFU!

He did the responsible, prudent, thing: right out of the starting gate, he tackled the long-term elephant in the room — the beast that presidents have been failing to grapple with at least since Nixon (he tried, somewhat halfheartedly, failed).

It remains to be seen whether it will work (and — how will we know?). But he did the brave thing, at great political cost.

Here’s hoping your children and grandchildren will have reason to give thanks even if you haven’t.

Health Care Budget Deficit Calculator. (Click the “Show CBO Data” button.)

What ALL Americans – Liberals AND Conservatives – Want

November 28th, 2010 Comments off

Washington’s Blog has a good list:

Break Up the Unholy Alliance Between Big Government and Big Banks
“the list of prominent economists and financial experts calling for the too big to fails to be broken up is wholly bipartisan:”

Throw the Criminals In Jail
“Everyone agrees that financial scammers must be tried and put in prison.”

Audit the Fed
“The bill to audit the Fed passed in a bipartisan landslide, and the overwhelming majority of Americans favor a full and complete audit.”

Safe and Healthy Food and Water
“A large majority of Americans want strong food safety rules, and want genetically modified foods to be labeled

Fair Elections
80 percent of all Americans oppose the Supreme Court’s recent decision allowing unlimited campaign contributions.”

Most Americans see these as — to use one of my friend Steve’s favorite words — “obvious.”

Who are the exceptions, the ones who don’t want these things?

Republican politicians. They’re devoted to blocking four out of five. (Notice which one has actually passed?)

I think that makes it pretty clear where the problem lies.

We Can Fix America If We Focus on What ALL Americans – Liberals AND Conservatives – Want → Washington’s Blog.

The Sky Is Falling

November 28th, 2010 Comments off

Did Democrats’ Policies Create Big State Budget Deficits?

November 28th, 2010 4 comments

Hooray. My friend Steve responded to my challenge. He posted some useless, misrepresentative data from the Wall Street Journal the other day, “showing” that blue states have bigger budget deficits, and suggesting that it’s “obviously” because of those blue-state policies.

Once he’d abandoned the New-York-has-a-bigger-deficit-[in-dollars]-than-Arkansas argument, he reverted to (in my words): “New York and California have big budget deficits. Their policies are the bluest of the blue. It’s obvious.”

I, of course, said, “show me the numbers,” because I simply had no idea whether he was right, and I’m always curious.

After pointing out that arguments agreeing with him “litter the Web” (they all go back to the same fact-free “source”; doesn’t he know better than to believe everything he reads on the interwebs [or hears on Fox News]?), he did:

Scatterplot below. As expected, it depicts a noticeable relationship. XLS file here.


Definitely a correlation there: .32. Pretty large by social-science standards. It makes you — or at least me — wonder if his causal narrative makes sense (again my words): “Blue” policies cause governments to spend too much, and exceed their means. It’s not a crazy narrative; I think it has some truth to it. (Though nowhere near as much as he thinks.)

As he points out, there are similar correlation levels out there that support some implied (and to some, “obvious”) causal narratives:

“…family income is correlated +.30 with the IQ of children…”

“…meta-analysis obtained a corrected correlation of .32 between socioeconomic status and academic performance… ”

It got me curious again some more, so I started checking out some other independent variables (those presumed “causes”). State tax burdens don’t correlate much with 2010 budget deficits, though somewhat curiously, the small correlation that does exist (for what it’s worth) says higher taxes = higher deficits. Interesting, but not very.

An amusing one, from the correlation ≠ causation ≠ policy prescriptions school of argument:

Correlation? .33. There’s the answer! Just reduce everyone’s income and we’ll have smaller budget deficits! (No, I’m not using that as any kind of argument against Steve’s findings. It’s specious. But still.)

But then I thought to myself, what’s the “obvious” (to everyone), #1 cause of economic problems in our country right now? The mortgage meltdown of course:

Correlation: .55. The causal mechanism (large declines in real estate values result in large declines in state revenues) isn’t hard to find. That one we could call “obvious.”

Now I could make the specious and superficial, quite obviously falsely false rhetorical comment, “Voting for Obama obviously causes foreclosures.” But that evades the best argument (which is what I’m always looking for): maybe something about “blue” policies created a situation that resulted in more foreclosures (and and/or hence bigger budget deficits). Is there a causal mechanism at work? (We know that the small correlation between smoking and lung cancer implies causation because we understand the causal narrative: the molecular mechanisms that are at work.) I can think of some causal narratives that seem reasonable on the surface, and I’m sure Steve can too.

But at this point it seems to me that we’re facing Manzi’s problem of “causal density.” Especially given Steve and my relative lack of knowledge and expertise about the mortgage market, there are simply too many factors at play to give any of those surmises much credence.

I, for instance, have no idea how much control states have over lending standards. (Ten seconds of googling later, I now know more. Answer, not much. American Bankers’ Association: “it is critical that any new predatory lending law does not alter the current regulatory structure by making federally chartered institutions subject to state regulation.”)

So where does that leave me? I’m somewhat more convinced that blue policies can result in larger state budget deficits in recessions. But based on the info here, I haven’t learned anything about which policies do that causing. Voting for Obama “obviously” isn’t the cause. So what is?

The spreadsheet with data sources is here.

Private Liquor Sales in Washington State: I Jumped Ship

November 27th, 2010 6 comments

We’ve got state liquor stores here in Washington for everything but beer and wine. I have to go to one to get booze instead of patronizing the store half a block away. I probably go five, maybe ten times a year, but I have friends who are cocktail aficionados who go far more often. I hope they’ll forgive me.

There are at least half a dozen great arguments for making liquor sales private like they are in most states — starting with free-market efficiencies. There’d probably be somewhat more commerce and general prosperity if they were private — and hence tax revenues eventually, over the long term. (Managing the state budget in the short term without the liquor-store revenues would definitely be an issue.)

Plus convenience and greenness — less driving for most, and less wildly annoying, time-consuming extra bus stops/trips for those without cars. (Not very “progressive,” in that sense.) For rural folks, far less.

Plus selection: the state stores will order special stuff for you, but only if you buy a certain quantity. And if you don’t plan ahead, at best you end up calling/driving around to different stores. (There’s a big one on Fourth Ave. South that happens to be fairly convenient for me, but sometimes what I want is at some other store.) At worst — if you don’t live in Seattle, for instance — you do without.

And customer service. The state liquor store employees tend to be officious and sometimes rude. You sure as heck don’t ask them about the subtle nuances of different single-malts. (Though if that’s what you’re after, you’re better off in any case going to Zig-Zag to see Murray, our local hero and America’s Best Bartender.)

Oh, and yeah: and the booze would be cheaper.

So when two separate ballot initiatives came up to privatize liquor sales (one pretty favorable to the vested, tiered distributor interests, but the other pretty good), the choice was obvious, right? Go for it. That was my thinking.

I’m really kind of embarrassed to admit that when I sat down with the ballot (Washington has all mail-in voting, so you sit at your kitchen table to vote; it ROCKS), I voted against both initiatives.

Why? First, going to the liquor store isn’t a big issue for me. I don’t very go often, and don’t want many special items. (It’s all about me, right?)

But even more: it just seemed like Seattle wouldn’t be as nice a place to live with private liquor sales. It would be way easier for people in general, and kids in particular, to get hard liquor, there’d be more (public) drunkenness and drunk driving (and drunk-driving deaths and injuries), more alcoholism, lots of really ugly, garish liquor stores like in California et al — just in general a less-nice place.

I know: you can tell I’m getting old and stodgy.

Truth be told, this is what I thought about:

Go ahead: accuse me of selling out my principles (and my friends) in favor of my (practical but also — I admit it — pathetically aesthetic) preferences.

Guilty as charged.

(Both initiatives were defeated.)

Where Did Our Debt Come From? – James Fallows – Politics – The Atlantic

November 26th, 2010 Comments off

One Conservative Gets It Right

November 25th, 2010 Comments off

“Asymptotically Stagnant Activities”

November 25th, 2010 Comments off

When I first saw this term, I assumed they were talking about me and all the time I spend on my little blog here. (They probably should have been.) It is all about me, right?

But they were actually talking about a much more interesting phenomenon: the shift in spending from “progressive” to “non-progressive” activities. No, this is not “progressive” in the common ideological sense. Here’s the idea:

Businesses can reap big productivity gains through technological innovation. But as the innovation makes the technology cheaper and cheaper, costs that can’t be automated (mainly people doing things) come to dominate the cost structure. So an ever-larger proportion of expenditures goes to those things. The whole enterprise is an “asymptotically stagnant activity,” always getting closer to zero productivity growth.

As a result, a greater percentage of resources is necessarily directed away from “progressive” sectors that have potential for high productivity growth (primarily manufacturing) and towards “non-progressive” sectors that don’t have that potential (i.e. human services).

This has been termed “Baumol’s Cost Disease.”

“the progressive component is innovating itself out of its cost-dominating position, ultimately the activity assumes all the characteristics of the stagnant services” (Baumol et al., 1985, p. 816).

My thinking: This may help explain why non-progressive activities — like health care and education — end up falling on government. Private enterprise naturally gravitates to progressive sectors where productivity growth holds high promise for future profits. The government is left carrying the load in other sectors — sectors that are necessary for the progressive sectors to flourish.

Does this help explain why government seems to “keep getting bigger”? Ever-increasing productivity drives Baumol’s Disease? (But maybe it’s not a disease, just a natural progression…)

And no: I don’t search for “asymptotic” to find these. I just run across them…

Tea-Party Winners Instantly Buy Into the Beltway

November 24th, 2010 Comments off

Staffing up with Washington insiders. Who’s not surprised?

Or a better question: who is?

Six real beauts. Here are three:

Sen. Mike Lee (UT) – Spencer Stokes, an energy lobbyist.

Sen. Rand Paul (KY) – Doug Stafford, VP of the National Right to Work Legal Defense Foundation

Rep. Nan Hayworth (NY) — Jonathan Day, coming over from the Republican Study Committee.

Weigel : Outsider, Meet Insider.

Pacifism: Bryan Caplan Gets It (Almost) Totally Right

November 24th, 2010 3 comments

I often disagree with Bryan Caplan — often quite vehemently — but not always, by any means. He’s one of the people who I’m constantly testing my thinking against.

He gets it so right with the following post that I’m going to make an exception (first time?) and reproduce his whole post here.

Cliches of Anti-Pacifism

I’m a pacifist.  I realize that it’s an unpopular position, but I’m still surprised by how quick people are to dismiss the position with cliches.  Here are three of the most common.

1. “If you want peace, prepare for war.”  This claim is obviously overstated.  Is North Korea really pursuing the smart path to peace by keeping almost 5% of its population on active military duty?  How about Hitler’s rearmament?  Was the Soviet Union preparing for peace by spending 15-20% of its GDP on the Red Army?

No on all three counts.  The truth is that preparation for war often causes war by frightening and provoking other countries.  That’s why the collapse of the Red Army made the inhabitants of the former Soviet Union safer from nuclear attack than they’d been since 1945.  This doesn’t mean that disarmament always makes countries safer.  But it does mean that military preparation frequently has the perverse effect of making countries less safe.  Discovering the conditions under which this occurs takes a lot more than a one-liner.

2. “Those who beat their swords into plowshares, will plow for those who don’t.” In earlier centuries, this was usually true.  But almost all rulers treated their subjects like chattel in those days.  The main reason to fear war wasn’t that policies would change if “your” government were defeated, but that you’d suffer or perish before the conflict was resolved.  From the point of view of the ruled, pacifism would usually have been an improvement.

In the modern world, the plowshares cliche is even more misguided.  Take a look at this list of military spending by country.  The U.S. naturally leads the pack, but is any sensible person worried that the U.S. will invade their country in order to take their stuff?  While the U.S. has the power to literally enslave most of the world, most Americans think it would be wrong, so it’s not going to happen.  The same clearly holds for five of the other top-ten military powers: the UK (#3), France (#4), Germany (#6), Japan (#7), and Italy (#9).  Even China, at #2, has far less awful intentions than the plowshares cliche suggests: While it might invade a totally disarmed Taiwan, the next step would be One Country, Two Systems – not mass enslavement of the Taiwanese.

3. “Pacifism didn’t work with Hitler.”  True enough.  But then again, nothingworked with Hitler.  The man was a monster.  Poland tried resistance, and was virtually destroyed.  Stalin tried alliance, and was stabbed in the back.  The Allies tried unconditional surrender, and left most Europe in ruins, and half under Stalinism.  Sure, with 20/20 hindsight, Britain and France could have invaded Germany in 1933 – or interrupted his parents a few minutes before his conception in 1888.  But two can play at the hindsight game: Pacifism could easily have prevented World War I, leaving no room for the likes of Hitler to rise to power.

I would add my pet concept of “mercenary morality”: Adopting a truly superior moral position — in deeds as well as words — in many cases delivers true power: the ability to convince your friends and coerce your enemies (and vice versa). The Bush administration’s words and deeds post-9/11 epitomize the squandering of such a morally (or in rhetorical terms, “ethically”) superior position, and the power that accrues to it.

Which points out one key place that Bryan gets it less than totally right:

is any sensible person worried that the U.S. will invade their country in order to take their stuff?

C’mon! Are you serious? Does any sensible person — even the nuttiest neocon — believe that the Halliburton presidency would have chosen to invade Iraq if Iraq didn’t have oil? How does that look if you’re not an American? It’s not crazy to understand why other countries have reasonable concerns on that point.